After a full eighteen months of being gaveled in for either regular session or a special session, July marks the first time that the legislature is not expected to be at the Capitol since the pandemic began.
They used nearly every minute before a government shutdown would have commenced, but a full budget was finally passed and signed into law by Governor Walz on June 30, including an omnibus housing bill.
Unfortunately, nearly all major housing industry priorities that were included in the Senate’s version of the housing bill, including the removal of exclusionary zoning practices, failed to make it through final negotiations.
“Despite our state’s already acute and worsening housing inventory and affordability crises, the legislature and Governor Walz failed to enact any meaningful reform to address the regulatory roadblocks which are pushing homeownership out of reach for far too many Minnesotans,” stated David Siegel, Executive Director of Housing First Minnesota.
“Our housing crisis will only be solved when the legislature fully addresses these roadblocks and exclusionary zoning practices that have taken Minnesota to record high home prices and the largest homeownership equity gap in the country between white and black Minnesotans.”
David Siegel testifies in front a Senate Committee in support of a bill that limit exclusionary zoning practices imposed by local governments.
“All throughout session we saw two vastly different strategies in approaching Minnesota’s housing issues,” said Mark Foster, Director of Legislative & Political Affairs. “The Senate advanced bills focused on expanding the overall supply of housing and advancing homeownership opportunities for more Minnesotans. Meanwhile the House spent their time advancing additional park and street impact fees that would cost homeowners thousands of dollars more and refused to hear any bills addressing Minnesota’s exclusionary zoning practices.”
Even while the legislature is officially on break, your Housing First Minnesota advocacy team will continue leading the charge at the Capitol to protect housing affordability and to advance the dream of homeownership for everyone, everywhere.
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Senator Rich Draheim (R), Madison Lake, is the chair of the Senate Housing Committee. He introduced and advanced many pieces of legislation aimed at expanding the supply of affordable starter homes statewide.
Here is a rundown of where the major housing items ended.
Housing Industry Initiatives & Priorities
Addressing Exclusionary Zoning Through Planned Unit Developments
HF 1840 (Elkins)/SF915 (Draheim)
In an important first step, a bill aimed at addressing Minnesota’s exclusionary zoning practices was sent to the Senate floor after hearings in both the Housing Committee and Local Government Committee. This legislation confronts one of the top affordability barriers head-on, the over-use and manipulation of Planned Unit Development (PUD) contracts as a means to approve housing projects. The goal of the legislation is to lift barriers that drive larger lot requirements and exterior design mandates in new home approvals.
David Siegel, Housing First Minnesota Executive Director, testified in favor of the bill.
“This bill is a first step to addressing the issue that experts have almost unanimously agreed is the key to fixing our growing housing and homeownership problems: lifting local barriers and zoning carve outs which are currently restricting the construction of affordably priced homes,” stated Siegel.
“We have heard from government groups that these are simply ‘the market’. That is wrong. The market does not restrict land availability and drive land costs, local governments and the Met Council do. The market does not demand large lot, large homes, with large garages for starter homes – local governments do. And, the market does not demand stone exteriors on starter homes – local governments in PUDs do.”
Local government groups presented numerous testifiers in opposition to measure, arguing that the SF 915 would take away “local control” from cities and towns.
Where it Finished: The bill has included in the Senate version of the housing omnibus bill, but did not receive a hearing in the House and was not in the final bill. Expect further discussion around this in the interim and again in the 2022 regular session.
5-Year Payback for Energy Code Provisions
SF910 (Draheim)
Minnesota builds some of the most energy-efficient homes in the country. By some measures we are #1 in energy efficiency. With that in mind, several legislators aim to protect energy efficiency, while also raising affordability as a top issue. This legislation mandates that the costs of any new provisions added to future updates to Minnesota energy code must have no longer than a five-year payback following completion of a new home project. This bill drew the opposition from more than a dozen special interest groups, but advanced following the committee discussion.
Where it Finished: The bill advanced through one committee in the Senate, but was not heard in the House. Expect further discussion in the 2022 session.
Single-family homes exempted from window fall prevention
HF1496 (Fischer)/SF802 (Koran)
Several years ago during a building code update process, single-family homes were mandated to include window fall protection devices in certain settings. This bill moves to strike that provision in many locations throughout one and two-family dwellings and townhomes, solving an egress issue and saving homeowners hundreds of dollars in the process.
Where it Finished: Signed into law, this provision has the potential to save hundreds of dollars per home. This updated language states that: window fall protection devices are not required in one and two-family dwellings if: the lowest part of an operating window is 24 inches above the finished floor – OR – the lowest part of the opening of an operable window is located 72 inches above the exterior grade below. This becomes active starting August 1, 2021.
Modernizing Building Permit Fees
HF 1085 (Stephenson)/SF801(Koran)
Substantial valuation variations and large permit fee surpluses in many growing cities have revealed structural problems with valuation-based permitting. There is simply no rationale for the wide disparities in accepted valuation at the time of permit issuance. Home size and features, not arbitrary valuation, is the number one factor in calculating inspection time and costs. SF 801/HF 1085 would end the valuation method of establishing permit costs, and instead move to a square footage-based system. This move would ensure that building permits and the homeowners who ultimately pay these costs, are charged fees that are fair, reasonable and proportionate to the actual costs to perform these inspections and plan reviews.
Where it Finished: This bill was heard in both chambers, but did not advance to the omnibus stage.
Housing Industry Items of Concern and Opposition
Increasing Park Dedication Authority
Initiated by the City of Rochester, this bill would create new park dedication authority for cities of the first class who are approving development projects. The House bill was heard and passed in both the Local Government Division and State Government Finance & Elections Committee and now sits on the House floor. Housing First Minnesota’s counsel, Peter Coyle, testified in opposition to the bill, citing concerns of a nexus, a deadline to utilize the dollars, and the potential for double dipping. The Minnesota Association of REALTORs ® and the Minnesota Multi-Housing Association have partnered with Housing First Minnesota to express the industry’s concerns with the bill.
Where it Finished: The bill advanced to the House Floor, but was never heard in the Senate. It ultimately was not included in a final omnibus bill.
Peter Coyle, counsel for Housing First Minnesota, testified in opposition to street impact fees and park dedication fee bills that would have added thousands of dollars to the costs of a new home.
Street Impact Fees
The street impact fee debate has returned in the 2021 session, continuing many years of discussion surrounding the need and appropriateness of off-site transportation fees in new developments. Prior to the Harstad v. Woodbury Supreme Court decision, many cities were requiring these fees despite having no legislative authority to do so. After the Harstad decision deemed these fees illegal, local government groups have asked the legislature to legalize the fee collection, which would create a new tax on housing developments for future, undefined transportation improvements.
As currently written, the proposed language provides new authority for city councils to impose an additional tax on growing businesses, non-profits, and housing developments. The proposal creates an end-run around requirements imposed upon cities under the special assessment laws designed to protect property taxpayers, including the demonstration of benefit and public hearings.
The House bill was heard and passed in both the Local Government Division and State Government Finance & Elections Committee after very contentious hearings. Housing First Minnesota led a coalition of nearly a dozen other business and non-profit organizations that are opposed to this legislation.
Where it Finished: After two very contentious hearings in the House, the bill did not make it to the omnibus stage.
Cities authorized to establish street improvement district
F1565 (Elkins)/SF 1998 (Johnson Stewart)
A close relative of the street impact fee issue, the proposal for street improvement districts would expand authority by allowing cities to draw street improvement districts where a fee or transportation utility could be required. This would impact both existing and new development. Housing First Minnesota joined dozens of opposing organizations when this bill was heard in the House Local Government Division.
Where it Finished: The bill advanced in the House, but was not heard in the Senate, and ultimately did not become law.
Carpet Stewardship Program
HF1426 (Jordan)/SF1171 (Weber)
Aimed at better managing flooring waste, this bill would create a new program to recycle carpet and has the potential to increase the costs of carpet by four-six cents per square foot, As written, it would authorize the commissioner to unilaterally increase the increase the fees even more in coming years. Housing First Minnesota signed on to a letter in opposition to the bill.
Where it Finished: The bill was discussed in the House, but not the Senate. The program was not created this year. This idea has been around for many years, so expect more discussion.
Mandating All New Garages to Be Electric Car Ready
BE053 (Bierman)
This concept would mandate all new garages and any remodeled garages of at least 50% would need to be electric car ready. This language has the potential to raise the costs of housing by hundreds of dollars for an item that very few consumers are currently demanding. The bill was heard in the House Climate Change Committee.
Where it Finished: The bill was heard as a discussion matter only, with no official action. Expect proponents of the concept to try to advance it in the 2022 session.
